One of the reasons for creating a written contract is to force the parties to consider the scope of the relationship into which they are entering. In an oral or implied license, though, the parties probably haven’t really fully thought out what their relationship is going to be. Which makes implied contracts litigation fodder.

In the case of implied licenses to copyrighted works, there is a well-accepted standard, originating in Effects Associates, Inc. v. Cohen, for deciding if the user of the copyrighted content had a license. There will be an implied license if (1) a person (the licensee) requests the creation of a work, (2) the creator (the licensor) makes that particular work and delivers it to the licensee who requested it, and (3) the licensor intends that the licensee-requestor copy and distribute his work.

In Fontana v. Harra, defendant Carmen Harra, a psychic, asked plaintiff Fred Fontana, a screenwriter and producer, to write a screenplay about her life. Fontana and Harra agreed that Harra would pay an advance of $13,000 for the script, with an unspecified amount to be paid out of the first funds invested in the film. Harra paid the $13,000 and Fontana delivered a satisfactory script. They had also agreed that Fontana would be co-producer; he performed some tasks in that role for which he was paid $5,000.

So there is no dispute about the first two requirements for an implied license, we have a script that is requested, delivered and accepted. But then the rub — what could the script be used for?

To Fontana’s unhappiness, Harra had been shopping the script around without him. Fontana claimed that he was due much more money for his screenwriting and production services and sought an injunction preventing Harra from using the screenplay to promote or produce the film.

So the court had to figure out what Fontana intended that Harra be allowed to do with the screenplay. It’s a question of ascertaining the author’s objective intent, at the time of creation and delivery, about the specific purpose for which the work could be used.

Framed that way, it’s not hard to see how it comes out on the injunction. Fontana first argued that he never intended that the screenplay be used until he had been paid in full. This was exactly the failing argument in Effects Associates: the failure to provide payment in full doesn’t void an implied license unless, plainly and unambiguously, full payment is a condition precedent. It wasn’t here, so Fontana’s claim for the rest of the payment was a contract claim, not a copyright claim.

Fontana also argued that, based on the scope of the parties’ business relationship, he never intended that Harra be allowed to create and promote a film without him. He proposed the following test to ascertain intent:

(1) whether the parties were engaged in a short-term discrete transaction as opposed to an ongoing relationship; (2) whether the creator utilized written contracts providing that copyrighted materials could only be used with the creator’s future involvement or express permission; and (3) whether the creator’s conduct during the creation or delivery of the copyrighted material indicated that use of the material without the creator’s involvement or consent was permissible.

But the court didn’t agree this was the proper test. It is used in cases deciding whether architectural drawings may be used to build a house without the architect’s further involvement, but it wasn’t necessarily probative in other types of relationships.

Looking at Fontana and Harra’s relationship more generally, the court found there was an intent to form a license. Fontana hadn’t alleged that the license was only if he produced the film; instead he alleged two separate agreements, one for screenwriting and one for producing. On the scope of the screenwriting agreement:

Plaintiff alleges that defendant Harra hired him to write a “screenplay about her life story” and that he would be “paid out of the first monies that were invested in the film.” This shows that from the outset of their agreement, the parties recognized that the screenplay was created with the intention that it would be used to create a film. Moreover, plaintiff’s intent is apparent from the fact that he was hired to write a screenplay as opposed to some other form of writing. Screenplays are written to be made into movies, and it would be unusual if plaintiff created the screenplay believing that it was going to be used for some other purpose. If plaintiff wrote, delivered, and received partial payment for the screenplay intending that defendants would make some other use of the document, he must explain what that use is in his complaint.

His work on the film’s production was further demonstration that he intended that the script be used to make a film. So, Fontana had intent that his script be used to create a film and therefore Harra was licensed for that use. But Fontana was given leave to amend his complaint, so the case may still survive.

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Ms. Chestek is admitted to practice in Connecticut, the District of Columbia, Massachusetts, New York and North Carolina and is Board Certified by the North Carolina State Bar's Board of Legal Specialization in Trademark Law.

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